In for a penny, in for a pound

Programs use financial incentives to encourage weight loss

Ashley Winchester

Updated 10:32 am, Friday, January 24, 2014

When Dean Karlan was in graduate school, he noticed he was slowly, but steadily, gaining weight. After three years, at 208 pounds, he weighed more than he ever had in his life. Frustrated with letting his studies get ahead of his health, Karlan and a friend drew up a contract to lose weight, putting their money where their mouth was. Each would have to pay the other half their annual stipend if their goal was not achieved.

"We wrote a contract with each other for enough money that we were going to change our behavior, but not so much that we couldn't physically write this check," said Karlan, now a Yale University economics professor. "The whole point is to make it more expensive to do something that you don't want to do -- smoke, exercise less, eat badly."

The experiment was a success. This contract, and later weight loss commitments, became the springboard for Karlan to co-found StickK.com with Yale economics professor Ian Ayres and then-Yale MBA student Jordan Goldberg. The website challenges users to create "commitment contracts" to set a goal -- whether for weight loss or another lifestyle change -- and stick to it. If they don't meet their goals, they have to contribute money to an unnamed charity.

More Information

Carrots and sticksHere are some online programs that use financial penalties and incentives to help people lose weight. StickK.comThe stakes: User-defined. More than $16 million has been wagered since the company was founded. The average contract is for $22.How it works: Users lay money on the line and designate a referee to make sure they're sticking to their contracts.The payout: If you fail to reach your goal in a given week, money is charged to your credit card and goes into a fund to be distributed to charity of Stickk's choosing -- or an "anticharity" of the user's choosing -- at the end of the contract.

HealthyWage.comThe stakes: $300 (one-year BMI challenge); $150 (10 percent challenge); user-defined (Healthy Wager program)How it works: Healthywage.com offers three weight-loss challenges with monetary prizes: In the BMI Challenge, participants who wager $300 and successfully move from an obese BMI to a normal BMI in one year win $1,000. Participants in the 10 percent challenge wager $150 on the promise they'll lose 10 percent of their body weight in six months; winners double their money. The website has partnerships with diet and exercise companies in verifying weigh-ins. The Healthy Wager program, launched last month, allows users to customize their weight loss bet and win up to $10,000. The program offers the best prize-to-bet ratio for players who are in most need of weight loss, company officials said.The payout: $1,000 (BMI challenge); $300 (10 percent challenge); up to $10,000 (Healthy Wager)

DietBetter.comThe stakes: Varies. $10 minimum.How it works: DietBet 4 is a four-week challenge to lose 4 percent of your starting weight. DietBet 10 game requires a 10 percent weight loss in six months. New games start every month. Money goes into a pot, and those who hit targets through successive rounds are eligible to receive a slice of the pot.The payout: Varies depending on success rate of the group. The company takes a cut, ranging from 10 to 25 percent of funds wagered. Game winners are guaranteed at least their money back; on average, winners get 1.5 to 2 times the amount bet, the company said.

StickK is one of many programs that uses financial incentives to help people lose weight. Some, such as HealthyWage.com, reward those who shed pounds with financial compensation, while others, including StickK, make them pay for not reaching goals. Does it work? Some research says yes. A recent Mayo Clinic study challenged 100 obese patients to lose four pounds per month over the course of a year. Half were paid $20 per month if they lost weight and had to pay $20 per month if they failed to meet their goals. Participants who had a financial incentive lost nearly seven pounds more on average than those without an incentive, the study found.

"The take-home message is that sustained weight loss can be achieved by financial incentives," said Dr. Steven Driver, the Mayo Clinic study's lead author.

StickK's Goldberg said these programs likely work because they provide immediate penalties and rewards. "The long-term costs of eating the cheeseburger today could lead to hypertension, diabetes, even a heart attack in 10, 20 years," Goldberg said. "But day to day, you're not feeling the cost. The whole idea behind the StickK approach is taking those long-term costs and bringing them forward. That cheeseburger isn't going to cost me $5. It's going to cost me $35. It's raising the costs of your poor decisions in real time so you'll feel them in real time."

Thousand-dollar success

Hamden resident Sara Kroon won $1,320 last year through HealthyWage.com, which offers three incentive-based challenges with monetary prizes. For the 36-year-old mom, the website was a last-ditch effort to get her weight under control.

"I was feeling helpless, that I was never going to do it on my own. I'd say, `Tomorrow I'll do it instead and not today,' " Kroon said. "I was desperate. I've never been able to lose weight. I've had such a struggle with it, and after the twins were born, it just seemed impossible. So the day after Thanksgiving, I was like, `I have to do this.' "

HealthyWage was "a way of forcing myself" to lose the weight, she said.

It worked.

Kroon lost 36 pounds over the course of a year, and went from a Body Mass Index of 31 to 24, through the website's BMI and 10 percent challenges. BMI is a common way of determining whether someone is obese or overweight, and is calculated using height and weight. A BMI of 25 to 29.9 is considered overweight and a BMI of 30 or higher is considered obese.

"I was hoping it was going to help me a lot, but I didn't realize how much," Kroon said. "The financial part of it really helped. Part of it was I wanted to earn the money, and I didn't want to lose the money I put in."

A review study of 1,500 patients, published in September by University of Toronto doctors, found that short-term financial incentives can increase the amount of exercise people do. The doctors, who mainly specialize in cardiac rehabilitation, hope their research and further studies can help treat patients and ultimately prevent repeat attacks.

For Kroon, the financial motivation has led to a long-term healthy change and habits.

"I have four kids," she said. "I don't have a lot of extra time in my life. Finding the time to exercise is the hardest, so I go out now (to exercise) after I put the kids to bed. I don't think I would have carved out the time if I didn't have the commitment. Because it's been a whole year, even though I'm done now, it's been great, because it just really got me into the routine (of exercise) and long-term changes."

Kroon said she lost her weight mainly on her own through exercise at the YMCA. But other programs lean on social motivation, in addition to financial incentives, to encourage weight loss.

Social dieting

Dietbetter.com, which launched last January, paid out more than $3.5 million in 2013 to users who joined one of their weight loss "games."

Fairfield resident Wendy Delson has been putting money on the line since August using Dietbetter.com. She's lost 25 pounds, seen her BMI move into a healthier range, and has made $100 through the site, which offers monthly private and public weight loss games with pots of as much as $200,000. Participants weigh in weekly, and use whatever method works best for them to help shed pounds.

"I've tried Weight Watchers, I've tried South Beach, I've tried so many different ways of dieting and the pounds were just coming on," said Delson, who is shedding pounds by watching her carbohydrate intake and making healthier choices. "This has been the only success I've ever had. It's been four months and I've kept the weight off."

She said the site's social encouragement aspects offer as much incentive as the financial ones. Those in the pool with Delson message each other on a regular basis, offering camaraderie over competition, which seems to make the program successful, she said.

"We're betting that we're going to do it, we're all working together and encouraging each other and that's what makes it work," Delson said. "Even though there's money involved, we still encourage everybody, which is very nice. We share diet tips, we share recipes that we've made. Someone will say, `I've hit a roadblock, what should I do?' or `I'm exercising and it's not really working.' There's all kinds of different questions and complaints we all talk about."

On average, 96 percent of Dietbetters lose weight, the company stated.

"At the end of every month, my friends have asked, `Are we in this again?' And we say yes. It's nice to get the money at the end, it's like, `Yay! I did it!' " but it's as much about the social support, Delson said.

"It's really nice when you see women working toward a common goal and sharing. We all come together, which is really nice. Nobody leaves anyone hanging, everybody really goes out of their way to help someone else. I feel like I really have someone -- no matter what time of day or night -- who will say, `We're there to support you.' "